… nice write-up in Washington Post on the risk to Tesla of Musk’s twitter adventure.
Tesla’s stock price plummets as Twitter deal hangs in the balance
Musk has taken out extensive personal loans that are heavily tied to the value of Tesla’s stock. At times, he has put down as much as 50 percent of his Tesla shares as collateral to back them. As the company’s share price approaches $600, Musk enters dangerous territory with lenders — where they could seek some of his equity to ease their confidence in his ability to pay, according to analysts.
“The Street will start to speculate, given the stock’s performance, that it’s getting dangerously close to that area code and that’s putting more pressure on the stock,” said Dan Ives, analyst with Wedbush Securities. “Because it’s a cascade effect. The stock coming down 35 percent since the Twitter deal, that was never on the map.”
For a few years in the late 1990’s, DELL stock was 75% of my portfolio. But the remaining 25% was well-diversified and I could comfortably live on less than a 4% withdrawal from that.
I hope the Tesla bulls are employing some similar metric in their situation. You don’t want to invest any funds you can’t afford to lose completely.